Binance sued for money laundering over stolen bitcoin.

[Bttzed03]

~
I never thought I'd say this, but I'm on Binance's side here. It is not their responsibility to cover for the mistakes and poor security of other exchanges. Someone contacting them and saying "Can you freeze these funds?", especially when those funds have come from multiple different addresses and could all have changed hands prior to reaching Binance, should not be sufficient for users to have their Binance accounts locked or frozen.

We should not be encouraging the development of a nanny state. If you want to use money which can be arbitrarily frozen or seized, then stick to fiat.

Like I said above, I also doubt Binance will held liable because I was also thinking it would be difficult to prove that the addresses used to transfer funds belong to the hacker/s. The accuser assumed they were and was expecting Binance to believe him but they didn't.

I was restating what was in the news and what was in that medium link you also shared as a response to the "it looks like Binance has some crystal ball to know that deposit X came from hacked bitcoin" statement. Regardless of who owned those bitcoins when it was deposited, they still came from the hacked exchange.

[TalkStar]

Those thieves really took advantage of the 2 bitcoin TX limit to avoid kyc, they were smart enough to split it and change it into different cryptos, but this looks really bad, this could tarnish the image of binance, allowing thieves to move stolen money into their exchange.

I think you may forgot that they are hackers and they usually keep all their plans ready before playing their final game. You can't expect that they will keep all the fund on the same address and will not mix it. I don't think it will put effect on binance reputation where hacked exchange security weakness is the main point here.

I doubt Binance will be held liable for money laundering but I'm still interested on how this will pan out. If ever they're charged as guilty, that will probably force their hand to change the no KYC for 2 btc or less withdrawal policy. That will be another game changer and will shake the CEX leaderboard.

Yeap agree with you. Although i don't think they will charged as guilty but hopefully they will gonna make some changes on their no KYC withdrawal policy.

[wxa7115]

It's funny how they are seeking for compensation for the losses as if it's Binance that was responsible for the poor security protocols in their shit exchange that led to hackers being able to steal all that bitcoin in the first place.

The 2 BTC rate per day is too small to launder such amounts of money unless they used so many fake accounts which brings the question of, how were they able to trace that all the bitcoins the claim went through Binance?

What kind of hacker would move such amounts of BTC to a centralized exchange where they can easily seize it without thinking of mixing it?

I agree, to me this seems to be a veiled attack on binance and their policy of not exercising KYC on small transactions and to try to bring an end to this as it gives people a privacy that it is difficult to get these days.

However I find really difficult the Japanese exchange is going to win this, they are trying to make it seem as if Binance itself is involved when this is clearly not the case, after all the Binance exchange is so powerful that they do not need a few additional million dollars and it will be dumb to think they will risk their reputation over this, however I wonder if this will lead to a change on binance policies and if KYC will be mandatory for everyone from now on.

[yhiaali3]

I think the blame is not on Binance, if the attackers Hacked the exchange and steal this large amount of Bitcoin and transfer it to Binance, they could have transferred it to any other exchange!
But on the other hand, depositing this large amount of Bitcoin should raise questions with Binance and request Kyc and AML.
I suspect there is something strange or missing in this story.

[o_e_l_e_o]

Binance has become toxic for this environment, worse than bitfinex and tether, I'm enjoying this from the bottom of my heart.

Agreed. Trying to stick their fingers in every pie - coinmarketcap, browsers, credit cards, etc - all while dumping trashcoins and scam ICOs on their users. They are trying to centralize the entire space for their own gain. It boggles the mind that people are apparently interested in financial independence, but also happy to continue to use and support entities like Binance.

Regardless of who owned those bitcoins when it was deposited, they still came from the hacked exchange.

So if I anonymously trade peer-to-peer and buy some bitcoin which happens to have come from a hack, through no fault of my own I deserve to have my coins seized and my account frozen as soon as they touch an exchange? Whatever happened to fungibility?

hopefully they will gonna make some changes on their no KYC withdrawal policy.

Hopefully!? Why are we hoping they are going to put in more strict KYC policies? More KYC and more privacy invasion is the last thing any of us should want.

I honestly can't understand why we would want more regulation, more oversight, more KYC, more privacy invasion, more subversion, more subjugation. The answer to an exchange being hacked is to stop holding your coins on exchanges, not to ask for governments to step in and take control.

[pixie85]

Not your keys not your Bitcoins it doesn't matter that they were stolen. You gave them the keys you gave them the coins!

The moment those thieves got hold of the coins the exchange stopped being the owner. There are no returns or chargebacks with Bitcoin. They can't demand any compensation from Binance.

Also even if they have proof that coins were deposited on Binance that's not how KYC laws work. You can deposit without KYC and you can also withdraw without it just within small limits.

[iRaMMuS34]

Even though I don't favor Binance much, it's not their fault. Asking for a chargeback is plain stupid in this situation

[verita1]

Indeed, the stolen Bitcoin was divided into 7 thousand transactions in different accounts, taking advantage of the minimum withdrawal of 2 BTC every 24 hours.

Perhaps if with a security mechanism that detects the IP address of these transactions, the laundering of funds could be detected.

The accusing party alleged that it warned Binance in time and that it was negligent and could prevent the criminal act. Only the result of the investigation remains if Binance was able to prevent it and pay the lawsuit or demonstrate its good procedure.

[bitsurfer2014]

I think that case will not prosper not unless the plaintiffs can prove Binance's knowledge in the hack and that it had wittingly and actively participated in laundering its funds.

Its like suing a bank because the robbers had deposited the money using several accounts which had been acquired in a proper way like e.g. (Binance level 1 unverified account) which is allowed to withdraw less than 2 BTC.

The element of Binance's guilty mind could be hard to prove in that situation and the plaintiffs had definitely have the burden of proof to convince the court of its case. Imho.

[Sadlife]

The exchange was not to blame in this case, Cryptocurrency is really hard to track, and you wouldn't know who's, who that's the sole purpose of anonymity. KYC could easily be bypassed, its not all safe. One could easily create fake ID's or steal identity from other people, its not like they could verify the ID in that country. Maybe that's the reason they're able to deposit huge amount of BTC.

[phreess]

They're quite right though. It's quite easy to launder smaller amounts of money as the no-KYC limit is 2 BTC per day if I remember correctly. Not sure how they laundered 1,451 BTC without exposing their identity though. Probably stolen documents?

More like forged documents. Stolen stuff can be tracked, forged stuff can't.

[phreess]

This will be a good lesson for Binance to strenghten its security. It looks like it was easy for thieves to take advantage of 2 BTC limit for no KYC. I don't understand why a very good crypto exchange like Binance overlooked this. This incident could tarnish Binance's image.

You are right, but even if the limit was 0.001 btc, you could just create accounts non-stop, but that would also hurt the casual crypto dudes imo

[maxreish]

Let's admit that Binance has partly fault here.
First off, they have weak KYC protocols.
Second, they have high withdrawal limits.

That was few reasons why users grab the opportunity and took advantage of it. With those everyday withdrawals of 2 btc, haven't the Binance suspected some suspicious activity here? It's pretty obvious that money laundering activity is on going and they can actually freeze those transactions. However, I still doubt they can do such if the suspected users used different or multiple accounts.

[Zemomtum]

It's funny how they are seeking for compensation for the losses as if it's Binance that was responsible for the poor security protocols in their shit exchange that led to hackers being able to steal all that bitcoin in the first place.

The 2 BTC rate per day is too small to launder such amounts of money unless they used so many fake accounts which brings the question of, how were they able to trace that all the bitcoins the claim went through Binance?

What kind of hacker would move such amounts of BTC to a centralized exchange where they can easily seize it without thinking of mixing it?

There are a lot of tools to monitor the transfer of asset to and fro, TrackX is one of them and I have traced many transfer to centralized exchanges. If it was reported and Binance does not block the account from operation, they will be guilty I think, but I am not a lawyer. The only thing they have to do is evidence they own the said amount of BTC, the transfer sequence to Binance centralized exchange and the official report to Binance staff of such movement.

[MCobian]

I am sure Binance will be found not guilty, and indeed this incident is not Binance's fault. Since the hacker is only taking
advantage of Binance's rules regarding withdrawals of 2 BTC there is no need for KYC procedures. And also an incident like
this will not damage Binance's reputation, there Binance will be increasingly popular with this news. It is highly likely that
Binance will change their system, the rules regarding KYC will be fully enforced to prevent this from happening again.

[Reid]

It's funny how they are seeking for compensation for the losses as if it's Binance that was responsible for the poor security protocols in their shit exchange that led to hackers being able to steal all that bitcoin in the first place.

The 2 BTC rate per day is too small to launder such amounts of money unless they used so many fake accounts which brings the question of, how were they able to trace that all the bitcoins the claim went through Binance?

What kind of hacker would move such amounts of BTC to a centralized exchange where they can easily seize it without thinking of mixing it?

Yeah! Why not look for the thieves instead. 
2 BTC every 24 hours. It will take a lot of time for them to launder it.
If I am the thief I won't go that way. I want it all handled as fast as I can with a little trace.
And to be exact.

Fisco alleged that since Binance was notified and had “actual knowledge” the stolen funds were sent to its platform, it “either intentionally or negligently failed to interrupt the money laundering process when it could have done so.”

There is no proof.
Of course Binance will answer this and will just say they are innocent about it. 

[imstillthebest]

Binance will be increasingly popular with this news. It is highly likely that
Binance will change their system, the rules regarding KYC will be fully enforced to prevent this from happening again.

previous users will complain if ever binance policy changed and require a kyc because of this issue but they dont hate binance rather they hate the people that reports binance .

 its also like a blessing in disguise for binance because they will be on the headlines again and it was like free promotion  as what you said but there could also people that think negative towards binance , we cant avoid that.

[Slow death]

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It was the fault of the poor security of the bag. What I can't understand this Japanese Exchange is accusing binance when they know it is their fault, it looks like Binance has some crystal ball to know that deposit X came from hacked bitcoin. What this Japanese exchange should do was ask for help with binance and not be accusing Binance

They don't need to have a crystal ball. The bitcoins allegedly sent by the hackers to Binance were not even mixed so it can be seen on the blockchain. As stated in the news, Binance was informed by the Japanese exchange but they never bothered to hold the funds.

I talked about crystal ball because I doubt anyone would transfer so much stolen money to an exchange where he could only withdraw 2 bitcoins a day, while that person could simply use many mixers that all his work would be much easier. I will wait to see what the outcome of this story will be in court. however in this article there is a lot of information about binance that always says there is no physical office in any corner of the planet.

[erikoy]

They're quite right though. It's quite easy to launder smaller amounts of money as the no-KYC limit is 2 BTC per day if I remember correctly. Not sure how they laundered 1,451 BTC without exposing their identity though. Probably stolen documents?

That would be a worst nightmare to a certain identity being use if will get trace and lead to a certain user who had no information on the current event that was happening. Actually 1400 + bitcoins to launder would be needing KYC and the user has the guts to do it. So hard to believe news these days. This year really a worst year for us having the pandemic plus people around doing dirty activities. This will not definitely will not going to put a stop and will probably going to continue and will gets worse as time pass by.

[mk4]

That would be a worst nightmare to a certain identity being use if will get trace and lead to a certain user who had no information on the current event that was happening.

It truly is scary and really really dangerous. This is one of the reasons why privacy and security advocates frequently tell people to take their internet security and privacy seriously. Because once your personal information and documents gets leaked to the internet? There's a decent chance that you're gonna get screwed.